AGEFI Luxembourg - septembre 2025

Septembre 2025 7 AGEFI Luxembourg Economie T he LuxembourgforFinance State of the Financial Sec- tor 2025 report outlines the evolution of Luxembourg’s fi- nancial services sector from 2014 to 2024, focusing on employment, gross value added, tax revenues generated, and the sector’s overall contribution to the national econ- omy. It also provides a brief overview of developments in banking, investment fund man- agement, and insurance, high- lighting key industry-level metrics over this period. Between2014and2024,Luxembourg’sfi- nancial sector expanded significantly in size,scope,andsophistication,reinforcing itspositionasacentralpillarofthenational economy. Over this ten-year period, the sectordemonstratedstronggrowthinem- ployment, value creation, and tax contri- butions, while also undergoing amarked diversification in its activities and interna- tionalworkforce. Employment Growth and Evolving Sector Comparison Thenumberofpeopleemployedinthefi- nancial sector increased from 54,195 in 2014 to 73,272 in 2024, reflecting a com- pound annual growth rate (CAGR) of 3.1%. This growth occurred consistently, evenduringperiodsofglobaluncertainty. While banking remains the largest em- ployer in absolute terms (35.9% of total financial sector employment in 2024), its share has declined significantly over the decade, from nearly 48% in 2014, re- flecting broader consolidation trends across the EU. However, employment in the banking sector has remained stable over the same period and total bank assets have grown by 30%. By contrast, investment fund management and professional services supporting the financial sector experi- encedstrongannualemploymentgrowth of 6.7%and 5.0%, respectively. The share of employment in investment fund management rose from 12.7% to 18.1%, while legal, audit and consulting services increased from23.4%to 28.2%. Other financial services, including pay- mentinstitutions,specialisedprofessionals of the financial sector, and investment firms, grewfastest, with employment ris- ing by 7.2% annually, broadening the range of financial activities conducted in Luxembourg. Increasing Internationalisation andDiversity The financial sector workforce became more international between 2014 and 2024. Foreign nationals made up 82% of employees in 2024, with the share of em- ployees from non-EU countries tripling from3.2%to 10.2%, growing at 15.7%per year, the fastest of anynationality group. Furthermore, the proportion of financial sector workers residing in Luxembourg increased from 49% in 2014 to 53.8% in 2024,reflectinggreaterintegrationofinter- national talent into the country’s popula- tionbase. SustainedValueCreation andSector Productivity The sector’s gross value added (GVA) rose from € 13.1 billion in 2014 to € 17.3 billion in 2024, an average annual in- crease of 2.8%. While banking’s GVA contribution re- mainedrelativelystable(+0.2%CAGR),its share fell from 56% to 43% over the decade. By contrast, investment fund management’sGVAshare rose from15% to 22%, a 6.3%CAGR. This growth is also linked to a strong diversification of Lux- embourg’s fund industry, which in 2024 accountedfor7.4trillionofassetsmanage- ment, of which nearly 36%were in alter- native funds (up from less than 20%only six years earlier). Financialsectorproductivityalsoremains high: each employee generated € 236,400 inGVA in 2024, 2.4 times the national av- erage of € 97,000. Multiplier Effect on the Broader Economy Foreveryjobcreatedinthefinancialsector, one additional job is generated elsewhere in theLuxembourgeconomy. In2024, the 73,272 direct jobs supported: - 48,927 indirect jobs (mainly in profes- sional services, ICT, administration) - 13,806 consumption-induced jobs - 10,650 investment-induced jobs In total, 146,655 jobswere directly or indi- rectlylinkedtothefinancialsectorin2024. TaxContributions: APillar of Public Finances The financial sector’s tax contribution more thandoubledover thedecade, from € 3.4 billion in 2014 to € 7.2 billion in 2024, corresponding to aCAGRof 7.8%. In 2024, the sector accounted for: - 64%of Corporate Income Tax - Over 60%ofMunicipal Business Tax - 80%ofWealthTax - 25%ofWithholdingTax on Salaries Subscription tax revenue also grew steadily, in linewith sustainedgrowth in Luxembourg-domiciled investment fund assets. From 2014 to 2024, Luxembourg’s finan- cial sector demonstrated not only sus- tained growth in employment and value creation,butalsoincreasingdiversification across activities and workforce. The sec- tor’s multiplier effect and its rising fiscal contributionunderscoreitscontinuedim- portance to the national economy. These long-term trends confirm the fi- nancial centre’s transformation into a re- silient, internationally integrated, and multi-specialist platform for global fi- nancial services. Formore informationthe fullreportcanbe foundhere, https://lff.foleon.com/brochures/state-of-the-financial-sector-2025/ Source: LuxembourgforFinance Luxembourg’s financial sector ADecade of Growth and Diversification Opinion – by Bruno COLMANT, Ph.D., Member of the RoyalAcademy of Belgium U .S. strategy, driven by its current decision-makers, appears to be evolving from a tariff war towards a coordi- natedmonetary offensive, trans- forming the dollar into a formidable geopolitical weapon. This plan, theorized by advisors like StephenMiran, a brilliant advisor to Donald Trump, aims to tighten the squeeze on U.S. partners through a se- ries of financial andmonetary mechanisms. To be a universal transaction currency and support its exports, the dollarmust structurally remainweak. This ismerelya reflectionof Robert Triffin’sparadox, the Belgian economistwho,more thanhalf a century ago,foresawtheunsustainabilityofthegoldstandard associatedwiththeBrettonWoodsagreements:acur- rencythatprovidesliquiditytotherestoftheworldis inherently devaluationary. This weakness also limits American imports, thereby complementing the effectoftariffs.Thistrendisnowactivelypursued by theU.S. administration tomaximize the com- petitive advantages of its companies, evengoing so far as to demand foreign investments onU.S. soil duringnegotiations. The next crucial step in this strategy involves sub- ordinating the Federal Reserve (Fed) to the con- trol of the executive branch and the Treasury. Three significant conse- quences would follow: a drastic drop in short-term interest rates, potentially below the inflation rate; a sharp increase in long-term U.S. rates (economists refer to this as a steepening of the yield curve); and the require- ment for the Fed tomassivelypur- chaseU.S. government debt. These combined actions would thus lead to a fall in thedollar, the creationof inflation, anda sharp rise in long-term interest rates, making the financing of U.S. debt more complex. In the face of this challenge, the U.S. strategyplans tocompel itspartners to subscribe to very long-datedU.S. bonds, potentially reaching a century.Theobjective,accordingtoStephenMiran,is to linkU.S. financing tomilitaryprotection and trade agreements, a tactic already foreshadowed in the agreement negotiated in Scotland, which appears unstable and incomplete. The idea is to secure near- permanent financing in exchange for strategic guar- antees,evenifthesebondscould,inthelongrun,lose all value, similar toRussianbonds frombefore 1917. Furthermore,theUnitedStatesexertsdailyinfluence over the global financial system via currency swaps with other central banks, which supply the world withdollars. These exchanges are vital for the global financial sphere. Once control of the Fed is gained, these swaps could be strategicallymodulated based on the cooperation of certain countries in various areas (military, tariff, etc.). Nations seeking to repa- triatetheirgoldheldattheNewYorkFederalReserve Bank(nearly600billioneuros)wouldthusbeheavily penalized. Beyond taxes, the orchestrated devaluation of the dollarwill represent anadditionalmonetarypenalty for exporters. If theFederalReserve, under thedirec- tion of a president appointed by Donald Trump, weretosignificantlyloweritsinterestrates(forexam- ple, from 4.25% to 2.25%), the USD/EUR exchange rate could shift from 1.16 to 1.25. For European exportstotheUnitedStates,thiswouldtranslateinto a 10% monetary penalty. Adding the existing 15% tariffs would bring the total to 25%, making Europeanproducts structurallymoreexpensiveand less competitive in the American market. The EuropeanCentral Bank (ECB)wouldhaveonly lim- ited room to maneuver to counteract this devalua- tionwithout compromising its stability. Admittedly, such a policy, transforming the dollar into a weapon, would threaten its status as the world’s reserve currency, accelerating de-dollariza- tion and the fragmentation of the financial system. By linking debt to defense, the United States would erode its credibility, fracturing alliances and global partnerships. It is the dawn of a world where trust comes at ahighprice, precipitating anunprecedent- edgeopoliticalandeconomicrealignment.Butgiven the current global upheaval, this strategy is not sur- prising. It was foreseen in Stephen Miran’s plan, which had theorized a tariff, commercial, military, energy, and financial alignment inU.S. negotiations. This plan is now in complete execution. In conclusion, the currency war is not yet openly declared, but its premises are clear. Europeans risk being the biggest losers, forced to endure this dou- ble penalty (tariffs and devaluation), while other players like China are preparing to align their exchange rate parity with that of the United States to protect themselves. The dollar: the ultimate weapon of the next economic shock Adaptive thinking AggregateCAGRovertheperiod:3.1% Chart:LFFSource:IGSSandSTATEC-dataasofDecembereachyearCreatedwithDatawrapper Chart:LFFSource:IGSSandSTATEC,dataasofendDecember2024CreatedwithDatawrapper AggregateCAGRovertheperiod:2.8% Source:LFFcalculationsbasedonIGSS,STATECandEUROSTATCreatedwithDatawrapper Banking Investmentfundmanagement FinancialHolCos Professionalservices Otherfinancialservices Insurance 2014-2024,inEURmn 2024,in% Belgians (11.8%) Germans (10.8%) French(31.4%) Non-EUnationals (10.2%) Other EU nationals (17.8%) Luxembourgers (18.0%) Banking Investmentfundmanagement FinancialHolCos Professionalservices Otherfinancialservices Insurance 2014-2024